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Am I understanding this correctly? Yes. Is there any way to bypass the testing for mega roth backdoor after tax contributions? Have zero eligible nonhighly compensated employees, no testing needed. In other words, employing only highly compensated employees who meet the age/service/entry requirements = no testing needed.

Exactly, this is either an owner-only play or may work in a very large plan that otherwise easily passes ACP testing, but is essentially a nonstarter in small plans that cover NHCEs.

They'll be allocated those zero dollars and LIKE it. (Zero value versus "null" value, if you've ever had a Crystal report come out crappy.)

We just received the 2025 SECURE 2.0 Amendment from ftWilliam. Most, if not all, of our clients will be going with the default selections in the amendment. Out of curiosity, are firms having their clients formally adopt the amendment now, or are most waiting until the required deadline of December 31, 2026? Thank you!

Unless you’re also in the business of providing tax or legal advice we only provide a recommendation to seek such professional counsel.

The correct way to do it is as David D suggests. Resolutions and amendments to terminate the plan and file a first and final $0 5500-EZ. How fmsinc describes it is likely what most people do. Just pretend like the plan never existed. No one ever elected to defer, the sponsor never funded plan. It's not the correct course of action but the odds of the IRS auditing a solo-k that never put any money into and presumable never took any tax deductions is probably quite small. But if you are a member of one of the alphabet soup organization you are problem subject to one or more code of ethics standards. The penalty for plan disqualification wouldn't be anything since there is no money so no disallowance of deduction or tax on trust income since there is none, but there is potential penalty of $250/day up to $150,000 should the IRS decide to press the issue. I'm not sure they would but they could.

Hmmmmm..... The DOL Online calculator is only used for determining earnings on untimely payment of deferrals to the plan trust that violate the DOL rules on when contributions must be made to the ERISA-governed plan. It can be used for full VFCP and must be used if self-corrected under VFCP. Right or wrong, many employers will correct the untimely payment of deferrals to the plan trust, calculating earnings using the DOL Online calculator, and not file anything under VFCP (but still file a 5330 paying the excise tax). We advise clients to do the self-correction notice or file the VFCP if self-correction is not available. Note though there is no requirement to file through VFCP (the "V" stands for "voluntary"). However, even if not using VFCP, plan sponsors still need to correct the late deposits with earnings and file the Form 5330 to pay applicable excise taxes (though they don’t need to file under VFCP). But like you state, without a VFCP filing, the plan has no authority permitting the use of the DOL Online Calculator to determine the lost earnings. Therefore, earnings should be calculated through an alternative method. Also, like you state, most practitioners advise using the IRS earnings method from EPCRS instead. That said, we have also assisted clients with DOL audits where they self-corrected using the DOL Online Calculator without filing under the VFCP and the DOL did not, after some discussions, have an issue with the corrections (even though there was no VFCP filing). We do NOT recommend using this alternative. At the onset, your post assumes there is an operational failure under the plan. We have found that most of the time there is no operational failure for untimely payment of deferrals to a plan trust because most of the plans we work on do not have any language in the plan stating when the contribution is due (other than they must be paid to the plan by the deadline required for the contributions to be deductible). If a plan does not contain the DOL timing rule or an equivalent, there is no operational failure (i.e., there is a DOL failure but not an IRS failure). If there is no operational failure, then no earnings are required for EPCRS. Assuming your plan has an operational failure, then the DOL Online Calculator might be able to be used for EPCRS corrections but only in certain circumstances. Under EPCRS the options for calculating earnings for late contributions are in order of priority (1) apply the actual earnings. This may be impractical or impossible, so EPCRS permits reasonable estimates which leads to .. (2) use the ROR for the best-performing fund in the plan. The IRS permits this because everybody wins using ROR… except perhaps the plan sponsor--using the highest ROR for the entire period (not separately for each plan year) of failure could prove to be very costly… so it may be more reasonable to…. (3) use the weighted average ROR for the plan as a whole. As reasonable estimates go, the plan’s ROR can be a justifiable approach. In other cases, if you must, you come full circle to ….lastly (4) use the DOL’s Online Calculator. EPCRS will allow the use of the DOL’s Online Calculator if the probable difference between the actual earnings and the DOL Online Calculator earnings is insignificant, and the administrative cost of the actual calculation would significantly exceed the probable difference. This sounds counterintuitive since being able to determine that there is an insignificant difference implies that actual earnings can be calculated. Yet EPCRS allows the use of the DOL Calculator, acknowledging that paying the service provider for a precise computation could outweigh the benefit of a small difference. This could happen when a) plans have self-directed brokerage accounts; b) 403(b) plans having participants with separate individual accounts; c) documents/info is unavailable, e.g., plan sponsor is bankrupt or out of business, natural disasters; and/or d) there are changes in service providers, which can all render it impossible to compute actual returns or even ascertain the best-performing fund. If you get to this point, the plan may use the DOL’s Online Calculator. In every other case which is usually the norm, the plan should use one of the other alternatives for determining earnings.

A plan which consists solely of deferrals and safe harbor contributions is deemed not top-heavy. As soon as a dollar of profit sharing goes in to the plan - regardless of whether it goes to a key or non-key employee - the exemption is lost. Now the plan must provide the top heavy minimum. First check the highest allocation rate to any key employee, including deferrals. If that's greater than 3%, then the top heavy minimum is 3%. Then look at each of the non-key employees, and see how much they received in safe harbor matching contributions. If they deferred at least 3% (or 5% if a QACA), then their safe harbor match would be at least 3% and they would not need any additional employer contribution. Then you have to give a profit sharing allocation to each of the other non-key employees who were employed on the last day of the year. If they received any match at all, then the profit sharing just has to be enough to get them to 3% match + profit sharing. If there are any non-key HCEs that received profit sharing, then you have to test the profit sharing allocation for coverage and non-discrimination. All of this is assuming that it agrees with your plan document. This is what the plan documents that I use say, but you have to read yours to make sure it's the same. For example, yours might give the top heavy minimum to all employees as opposed to just non-keys, or it might not have the last day requirement, or something else entirely.

I actually liked Lotus back in the day 🤣.

I do all my stuff on green sheets still.